Seeking ~14mm in VC capital for a startup
(in multiple funding rounds...starting with a 2mm Seed round)
Can you guys give me a list of 10-20 VC firms that I should approach for my seed round?
(lots of background info below....but all just in an effort to help those with industry knowledge to provide a list of VC firms that are actively making Seed investments in the FinTech space)
I have an idea for a startup in the financial markets exchange realm, but it will require significantly more capital and developer-hours than I can put in myself. I think its a candidate for a VC firm, but I've never pitched to a VC firm, so maybe some people on this board can point me in the right direction.
My background: BB IT Developer (programmer) --> Market Maker --> Prop Trader
The startup is a new type of trading exchange that takes advantage of the current regulatory and BB fixed income brokerage model (BBs have been pulling back and cutting costs on certain industries). There are a few other startups in this arena, but they all specialize in certain niches, and lack multiple aspects of what would create the "ideal" exchange platform for these products/securities, and most of these other startups have not generated enough scale/market saturation to reach exit potential (i think because of their business model - can be done much better than current operators).
The TAM (total addressable market) is about 20 billion/year.
By my estimate, my company (when grown to scale) should be able to capture in the range of 1-5% of that market. More TAM% would, of course, be great...and its "possible" to achieve 10%, but in seeking to be reasonable, I don't want to be caught as overly optimistic.
Doing the math on 1% of the total addressable market, this company should generate ~200mm revenue when fully operational within ~5 years...and about 80mm/year of profit on that 200mm (so an 800mm target exit valuation, depending on what kind of multiple these companies sell for...i'm just assuming 10x profit). These numbers are assuming average market penetration. The potential is for more, but I'm not going to say "if I get 10% of the market, we'll make 2bln/year" because I don't think 10% market saturation is reasonable to expect (tho would be nice).
IEX is a good comparison....they are about 6 years old, and made about 50mm last year (or so i read)
BondPoint sold for 400mm in 2018
TMC sold for 685mm in 2018
TruMid raised 37mm in 2017 and is valued at 100mm+
Nasdaq bought eSpeed for 750mm
And there are others...but there is still room in the exchange business for untapped/inefficient business models
I have a tech/programming and trading background, so i know exactly what the platform should look like, and I have a basic idea of the programming work involved. I'm estimating that it will cost all in about 10-15mm to get this exchange self-funding and profitable (that 10-15mm includes basic rent, IT developers, a sales force, and all the other admin stuff that comes along...but the bulk of the expense is developers that will cost 150-250k/year + stock options).
Ok, so anyway...who do I pitch my idea to? Is there a list of VC firms and ways to contact them? What kind of equity valuation should I be seeking at this point from a Seed VC? (Right now, this startup is just an idea in my head)
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